The big switch

The time is coming near where One Big Switch say they will be shaking up the mortgage market in Ireland by using the power of group persuasion to get a bank to make an offer that is lower than that which is currently available.

Is this likely to succeed? In particular given that even the Central Bank and Government have failed when it comes to demanding that banks lower their rates?

We would think ‘yes’, because this campaign speaks to banks in the language they understand most, that of customers and money. With loan growth becoming much slower and aggregate credit continuously shrinking for the last eight years, it means that banks don’t have a large amount of choices for new business.

Attrition will be part of the plan and it isn’t one shackled by the Central Bank lending rules because they don’t apply to switcher loans where there is not a top up element to the loan. This means you take a proven credit track record and equity in the property and you obtain what we refer to as ‘denominator loans’, by that, we mean that it allows more exception loans which are so rare by increasing the number of loans being done within the CBI guidelines.

How much of a good deal will it be? That remains to be seen, but we are of the belief that at least one bank will bite and that there will be a fixed rate option with other incentives attached. Hopefully people power will do what official power couldn’t achieve.

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